No collateral required for 'Hustler' loans, defaulters won't be listed on CRB

Kenyans tapping from the Financial Inclusion Fund or Hustler Fund will not be required to have collateral for loans obtained.

At the same time, borrowers who default on facilities from the Fund will not be negatively listed with Credit Reference Bureau (CRBs) as the government moves to enforce credit scores as the measure of borrower’s credit worthiness.

The National Treasury made the disclosure at the end of public participation sittings for regulations governing the fund on Wednesday.

“We are moving away from the CRBs and collaterals and we will be basing disbursements on the character of borrowers. The more we can formalise the customers' behaviour the more we can graduate them to higher loan limits,” Samuel Keria, a member of a task force reviewing the regulations told stakeholders.

The disclosure implies loans under the Financial Inclusion Fund will largely mimic those disbursed from digital/mobile applications where a borrower is locked to a lower limit of funds before they can qualify for higher loan values.

At the same time, Treasury has disclosed the first round of disbursements which covers loan values of between Ksh.500 and Ksh.50,000 will be targeted to individuals across the country with Sacco’s, chamas and enterprises qualifying for loans at a higher amount in subsequent phases.

“The first phase of the fund will be targeted at individuals devolved in the Counties. The medium-term plan is to graduate the limit to about Ksh.500,000 to cater for medium-sized businesses. In the long-term, the maximum loan limit is likely to average Ksh.3 million for larger enterprises,” added Mr Keria.

On Tuesday, the Cabinet announced the first phase of the Fund would be launched on November 30 with loan limits capped at Ksh.50,000 based on each borrower’s credit score.

Loans issued under the fund are expected to attract an interest rate of eight per cent per year.

The National Treasury held public forums to sensitise Kenyans on the regulations to the fund and seek input from stakeholders across all Counties between Monday and Wednesday with workshops set in Meru, Kitui, Mombasa, Nakuru, Nyeri, Nairobi, Eldoret, Kisumu and Kisii.